The root filesystem should generally be small, since
it contains very critical files and a small, infrequently
modified filesystem has a better chance of not getting corrupted.
A corrupted root filesystem will generally mean that the system
becomes unbootable except with special measures (e.g., from a
floppy), so you don't want to risk it.

The root directory generally doesn't contain any files, except
perhaps the standard boot image for the system, usually called
/vmlinuz. All other files are in
subdirectories in the root filesystems:

/bin

Commands needed during bootup
that might be used by normal users (probably after
bootup).

/sbin

Like /bin, but the
commands are not intended for normal users, although they
may use them if necessary and allowed.
/sbin is not usually in the default
path of normal users, but will be in root's default
path.

/etc

Configuration files specific to the
machine.

/root

The home directory for user root. This is
usually not accessible to other users on the
system

/lib

Shared libraries needed by the programs on
the root filesystem.

/lib/modules

Loadable kernel modules, especially those
that are needed to boot the system when recovering from
disasters (e.g., network and filesystem
drivers).

/dev

Device files. Some of the more commonly
used device files are examined in Chapter 5

/tmp

Temporary files. Programs running after
bootup should use /var/tmp, not
/tmp, since the former is probably on a
disk with more space. Often /tmp will be a symbolic link to
/var/tmp.

/boot

Files used by the bootstrap loader,
e.g., LILO. Kernel images are often kept here instead
of in the root directory. If there are many kernel
images, the directory can easily grow rather big, and it
might be better to keep it in a separate filesystem.
Another reason would be to make sure the kernel
images are within the first 1024 cylinders of an IDE
disk.
[1]

/mnt

Mount point for temporary mounts by
the system administrator. Programs aren't supposed to mount
on /mnt automatically.
/mnt might be divided into
subdirectories (e.g., /mnt/dosa might
be the floppy drive using an MS-DOS filesystem, and
/mnt/exta might be the same
with an ext2 filesystem).

Notes

This 1024 cylinder limit is no
longer true in most cases. With modern BIOSes and
later versions of LILO (the LInux LOader) the 1024
cylinder limit can be passed with logical block
addressing (LBA). See the lilo
manual page for more details.